How to Prepare and Apply for a Business Loan

Are you seeking funding to start a business? Do you require additional money for expansion?

Regardless of why you’re interested in a business loan, this is a big step. Not only will it impact your finances now, but it also has the potential to do so for many years to come.

There are many steps you can take to successfully prepare and apply for a business loan. Here are five things you should do:

1. Review Your Credit Report, Check Your Score

With an excellent credit score and no red marks on your credit report, it’s much easier to find a lender willing to provide you with the funds you require.

Conversely, if your credit score is poor and your credit report is littered with late payments and delinquencies, your options are limited.

If you come to find that your credit score isn’t up to par, wait a few months (or longer) before applying for a business loan. During this time, focus on cleaning up your report and boosting your score.

2. Know What You Want

It’s easy to say that you want to apply for a business loan, but there’s more to it than that. You need to know exactly what you want, as this ensures yourself of securing the best loan possible. Some of the most important questions to answer include:

  • How much money do you need to borrow?
  • What are your plans for using the funds?
  • What type of business loan is best for you?
  • What type of repayment period are you interested in?

When you know what you want, it’s easier to efficiently move through the process. Not to mention the fact that it can protect you against a costly error.

3. Talk to Your Local Bank

As a business owner, there’s a good chance you have a relationship with at least one local bank. Talk to them about business loan products, ask key questions, and learn more about the application process.

Even if you don’t end up doing business with your local bank, the information you collect will help you when searching for a better option.

4. Search Online

If you decide against taking a loan from your local bank, turn to the internet to conduct a national search. 

Yes, it’ll take some time to compare all your options, but it’s worth it in the end. A comprehensive search is the best way to make a confident decision. 

Tip: work as quickly as possible to narrow your list to three to five lenders.

5. Compare Terms and Conditions

Once you have a short list of lenders, compare the terms offered by each one. This can include but is not limited to:

  • Amount of money you can borrow
  • Interest rate
  • Length of the repayment period
  • Payment options
  • Fees

Also, don’t overlook the importance of choosing a reputable lender that provides a high quality customer service experience.

Once you do all these things, there’s one step left: apply for a business loan and wait for a decision.

If you receive an approval, you can then decide if now’s the right time to sign on the dotted line!